by Peter Schlactus, CIC, AAI
you care about insurance fraud? With so many other
priorities demanding your attention, why devote
precious time to something the police and insurance companies should be worrying about?
It boils down to dollars and sense. Everything you do to
reduce insurance claims will also reduce your insurance costs.
Most people do not commit fraud unless they expect substantial rewards. As a result, fraudulent claims tend to be sub-
stantial claims that can really affect your rates for years to come.
With a dose of enlightened self-interest, try to appreciate
the larger issues at stake. The courier industry's reputation in
the insurance industry is precarious at best, fed mostly by equal parts of ignorance and fear. You tread a fine line between
the truckers and the pizza delivery boys -- both of which generally pay higher premiums than you do.
It takes little to sour an insurance company on couriers. Your
continued access to "affordable" insurance protection
depends on maintaining a better record than other so-called "high-risk" delivery businesses. Each courier company
that dedicates itself to zero tolerance for fraud helps the entire industry hold the line against higher insurance costs.
#1 GOAL = LOWER COSTS
By taking a hard, active stance against fraud in your
business, you can save money in two ways. First, sometimes
you can identify and foil a criminal (that's what these guys are!) before he or she hurts you. Second, you can deter
others from even trying to get away with false claims. Take a lesson from some of the insurance industry's toughest
fraud-fighters, who cite deterrence as their number-one objective.
Just as home-security ads boast about how burglars will bypass
an alarmed house in search of easier pickings, so
too will the better (and most dangerous) con-artists steer clear of your business once they hear about your reputation.
You also avoid the copycat claims from disgruntled workers who see a co-worker "get away with something" and feel
entitled to do the same.
Fraudulent insurance claims feed on each other. It's up to you to break the cycle!
10 TELLTALE SIGNS
How do you spot fraud when the
perpetrators are increasingly devious and sophisticated? Malcontent drivers
only part of a gigantic problem that includes attorneys, clinics, doctors -- entire fraud rings that steal hundreds of
millions of dollars each year. Ultimately the cost of this crime is borne by you, the policyholders.
Experience shows that when two or more of the following
factors are present in a workers' compensation claim, there
is a chance the claim may be fraudulent. Remember, though, that these are just trends. Many perfectly legitimate
claims are filed on Mondays, and some accidents have no witnesses.
1. Monday Morning Mess: watch
for alleged injuries that occur first thing on Monday morning, or ones that
late on a Friday afternoon but are not reported until Monday.
2. Employment Epiphany: watch
out when the reported accident occurs immediately before or after a job
layoff, end of a big contract, or at the conclusion of seasonal work.
3. Suspicious/Same Service-Providers:
watch for medical providers and/or legal consultants with a past history
handling suspicious claims, or situations where groups of claimants use the same doctors or lawyers.
4. Where's the Witnesses? watch
out when the accident has no witnesses, and the worker's own description
not logically support the cause of the injury.
5. Conflicting Claims: watch for
incidents where the worker's description of the accident conflicts with the
history or First Report of Injury.
6. Relief Refused: watch out
when the claimant refuses a diagnostic procedure to confirm the nature or extent
7. Hardly Home: watch for claimants who are hard to contact at home when they are allegedly disabled.
8. Reluctant Reporting: watch
out when the worker delays reporting the claim or seeks treatment without a
9. History from Hell: watch for
claimants with a track record of numerous suspicious or litigated claims -- even
with 'unbelievably' terrible 'luck.'
10. Changes: watch for claimants
with a history of frequently changing physicians, changing addresses, and
past employment changes.
Again, refrain from over-zealously investigating a claim
simply because it exhibits one particular symptom of fraudulent
claims. In most true cases of fraud, more than one indicator is present. Also, one must take care not to violate worker rights.
STAGED AUTO ACCIDENTS
In addition to fraudulent workers compensation claims,
another serious problem is having your vehicles targeted by
criminal bands who stage auto accidents in order to collect on insurance payouts.
Their most common tactic is to lure your driver into
rear-ending their car, whose occupants then allegedly develop pro-
longed and debilitating back and soft-tissue injuries. In rear-end accidents the fault is almost always assigned to the rear
vehicle, which presumably should have been alert enough to avoid the collision.
Staged accidents usually are set up in the following situations:
· On highway on-ramps
· In slow-moving traffic
· When leaving driveways and parking lots
Instruct drivers to be doubly on-guard in the above
situations. They should maintain a safe distance from any car in front
of them and should watch out for sudden stops for no reason.
Often your drivers are purposefully distracted in the hope
that they will relax their guard and fail to notice the car ahead
when it suddenly brakes. This generally involves a third vehicle. Perhaps a car alongside begins to drive erratically --
speeding up, slowing down or cutting in front. Drivers need to be made aware that this behavior may be a precursor to
their being set up for an accident.
CALLING THE CAVALRY
When you suspect fraud you should notify your insurance broker
and carrier as soon as possible. The police can be
notified but, given the negative consequences of false arrest, you should consider consulting your attorney before
Insurance companies differ dramatically in their attitude
toward fraud. Some still treat false claims as a "cost of doing
business." Others have been described by major newspapers as "pursuing fraud with the single-minded intensity of
a pit bull."
Given the expenses faced by the real fraud-fighters, their
up-front premiums may not always be the most attractive.
Nevertheless, by keeping your claims record as clean as possible, they can actually save you a lot of money over time.
Keep this in mind when shopping for your insurance.
Also, look for brokers with dedicated claims service
departments with transportation-sector experience that can
devote time and energy to making sure your suspicions are properly investigated.
Insurance fraud is a grave matter, and one that all courier
owners and managers would do well to address. The
direct and indirect cost savings to you and your industry can be enormous.
You can effectively combat fraud by watching for the telltale
signs and spreading the message clearly through-
out your organization that fraud will be treated with zero tolerance.
You can communicate via meetings, one-on-one conversations,
paycheck envelope stuffers, bulletins, posters,
or newsletters. However you choose to do it, choose to do it today. Do not delay.
When it comes to insurance fraud it's your choice: Zero
Tolerance, or a tolerance for more zeros next to your
Peter Schlactus, a Certified Insurance Counselor and Accredited Advisor in Insurance, is Co-President of KBS International Corp., which provides specialized insurance programs, benefits, and risk management services to courier companies and executives nationwide. Mr. Schlactus is available to answer inquiries at 1-888-KBS-4321 or via e-mail at firstname.lastname@example.org.
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